A laboratory experiment was conducted to determine the spectral characteristics of different types of sediment under suspension in water and to select an optimal wavelength for the quantification of suspended sediment concentration and secchi depth (water clarity) in the Tawa reservoir, using the Indian Remote Sensing Satellite-1A Linear Imaging Self Scanning Scanner-I (IRS-1A LISS-I) data. It was noted that the correlation between suspended sediment concentration and reflected radiance varied with colour, mineral composition of sediment and grain size. The clay minerals of low specific gravity had a larger value of reflected radiance than those from high specific gravity non-clay minerals. The laboratory results indicated that an algorithm to quantify suspended sediment concentration and secchi depth in the reservoir can be developed from reflected radiance received by the satellite. For this purpose the Tawa reservoir on the Tawa river of the Narmada basin in Central India was selected. Tawa reservoir water samples were collected on 20 October, 1988 concurrent with an IRS-1A overpass. The secchi depth, pH, and conductivity measurements were made at all the sampling points. The samples were analysed to determine the concentration of total suspended matter, grain size and mineralogy. A positive functional relation exists between the concentration of suspended solids and the visible wavelength bands 1, 2 and 3 (0.45 to 0.68 mu m). On the other hand, the secchi depth of water increases with the decrease in reflected radiance. It has been observed that concentration, mineralogy and grain size of the suspended solids are the main factors which influence the reflected radiance.